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Health Savings Accounts
Health Savings Accounts ("HSA"s) were first made available in 2004, offering more flexibility and higher contribution limits than their predecessor Archer Medical Savings Accounts.
What are the benefits?
The annual out-of-pocket cost is lower than many traditional plans, factoring in premiums plus out-of-pocket expenses. The amount contributed to the plan, to cover deductibles and other out-of-pocket expenses is pre-tax: like a 401(k), it reduces gross income and avoids tax. (Note: this is even better than a tax deduction!)
Who can contribute?
Anyone under 65 who is not covered by another health plan (with exceptions in specific circumstances).
How does it work?
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You buy a High Deductible Health Plan ("HDHP") that is pre-qualified for HSAs.
- The plan must have an annual deductible amount of at least $2,100 (family) or $1,050 (single).
- Annual out-of-pocket (for deductibles and co-pays) cannot exceed $10,500 (family) or $5,200 (single).
- You open an HSA with an approved custodian such as Wells Fargo bank and deposit up to $5,450 (family) or $2,700 (individual).
- You withdraw money from the HSA to reimburse yourself for out-of-pocket expenses.
Which insurers offer HDHPs in California?
Most of the recognized names, including Blue Cross, Blue Shield, Nationwide, Aetna, PacifiCare, Health Net and others.
Where can I get more information?
